After telling Blizzard to cut spending, Activision pays $15 million bonus to new CFO

    
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Hey, do y’all remember a little bit back when Activision told Blizzard that it had to start cutting back on its spending? Oh, and that time when it turned out that, in order to cut costs, Blizzard was paying employees to leave its Cork, Ireland office? That’s good, ’cause we do, too, which is why it’s just so gosh-darn strange to hear that Activision recently shelled out an astronomical $15 million US signing bonus to its new CFO, Dennis Durkin — and that’s on top of his nearly-seven-digit $900,000 salary, amounting to $11.3 million of restricted stock and a flat $3.75 million sign-on bonus.

Durkin is replacing the company’s previous CFO, Spencer Neumann, who you might remember was ousted earlier this year. As PCGamesN points out, it’s certainly not at all uncommon in the business world for companies to dish out beaucoup bucks to secure the best employees they can find — especially in high-level positions such as Durkin’s — but it’s still hard not to see the monumental signing bonus as an act of blatant hypocrisy in light of the recent reports regarding Activision’s efforts to force Blizzard to curb its spending. That being said, however, we think everyone can agree that, although the act is certainly galling, it’s by no means surprising.

Source: PCGamesN. Thanks, Zora!
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kelvar

Unsurprisingly executives and those with the purse strings take care of themselves (very well) while unconcerned for the unwashed masses.

I’ve observed this in every company I’ve ever worked for (hi PayPal!).

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Josh

Yup, this is why I believe that the supply-side theory (i.e. trickle down economy) isn’t effective anymore. Sure, it was great for Reagan, but when Shareholders realized that they could get CEOs and CFOs to focus more on increasing stock price in the short term than investing in overall company health, they started giving massive bonuses to them, which means that there’s a lot less $$$ to trickle down than there used to be.

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Armsbend

The United States is currently in the throes of becoming Britain during the Victorian era. Massive wealth created at the top – little to do for the commoners except becoming servants (modern slaves). It’s funny how people from the US think we are somehow different than the lifespan-path of every nation that has come before us. We are not. We are going through the exact same motions that every nation-state has gone through since Rome.

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Bývörðæįr mòr Vas´Ðrakken

Had to find the actual numbers they match what leiloni said, it is part of the stock to prevent a buy out by a number of companies that have tried to sink the stock value to buy the companyʻs ip cheap and dump the employees. The Chief Financial Officer, is responsible for making sure that the revenue or residual income which means net profit after costing out is greater than or equal to the cash reserves plus the salaries of the employees.

Which means if the salaries of all of Activision are safe 100 million for a round number then they have to bring in an operating cost of 80 million, plus 100 million for the salaries, and the revenue is the money above that that is greater than or equal to the cash reserve on hand from the prior year that did not have to be spent to cover losses. So say they have cash reserve of 250 million dollars then in the example to make a penny or revenue they have to make a gross profit 100 + 80 + 250 = 430 million plus any losses that were not covered in overhead which falls under the operating costs. based on the bonus my guess is that the exiting cash reserve in 2012 when he was the CFO before was 375 million, and that the cash reserve is far lower and the stock options are for hitting mile stones in generating actual income not value. Value is important but cash flow inward and outward matters far more to the stability of a company. So you pay the CFO and CEO enough money that they never feel the need to dip into cash reserves to pay for large expenses out right. The money sounds are like way to much to people not making 100,000 a year but if instead of managing the funds of Activision how much could he make investing in the stock market for himself let alone for clients? Depends on how much money and how soon he needed it. The largest benefit to working for someone else is that they pay you better than you can make investing your own money, and that money comes sooner than the ten to twenty years investing requires to make good on investments.

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Leiloni

Less than a month after it was reported that Activision had told Blizzard to cut costs, it is paying its new chief financial officer a signing bonus worth $15 million (distributed as $3.75 million in cash and $11.3 million in restricted stock tied to performance targets, according to Bloomberg). That’s on top of a $900,000 salary.

He was paid less than $4 million in bonus money with the rest in stock that he only gets if he does a good enough job and reaches goals they set for him. In other words, he only is guaranteed the $3.75 million. The rest is a maybe, and who knows how far down the line he’d even get that.

The lucky recipient is Dennis Durkin, who previously served as Activision-Blizzard’s CFO for five years until May 2017. Durkin replaces Spencer Neumann, who is taking the same job at Netflix – his contract at Activision barred him from speaking to other potential employers, so he was fired as soon as the news became public.

On top of this, it appears the only reason they hired a new CFO was because the old one left for a new job elsewhere. So Activision has no other choice but to find a new CFO, and do so quickly. So, they went back to the guy they had just 2 years ago. Makes sense. And clearly that money isn’t new money they just took from elsewhere in the company, it’s likely what they were already paying the old CFO.

That’s a massively different story than what you just wrote.

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Nathan Aldana

somehow, I cant even say anything corporations do anymore surprises me in its brazen greed.

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Bannex

Brazen greed that employs 4000 people. How many families are you responsible for putting food on their table?

Oh yeah we’re supposed to hate businesses.

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Bruno Brito

Explain to me why is a CFO worth more than Developers or even the cafeteria lady who struggles to keep smiles while people shove their entire frustrations on her face?

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Bannex

Not only is that not worth my time, if I did you’d likely continue to argue with me some nonsense point while regurgitating some pseudo-socialist rhetoric you read on reddit this morning.

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Bruno Brito

Not only is that not worth my time

Evasive. You can’t answer because you’re skewed in your very beliefs. You can’t prove these C-level personnel produce anything worthy more than the competent and ill-paid developer. Grow up.

if I did you’d likely continue to argue with me some nonsense point while regurgitating some pseudo-socialist rhetoric you read on reddit this morning.

Ad hominem with no argumentative value.

You’re just an apologist, nothing worth of value nor interest. Move right along.

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Bannex

Ya got me!! I really wanted to get into a semantics debate over the meaning of worth with you. I also am such a corporate apologist because I recognize the fact that these corporate bastards are responsible for feeding more people than you ever will.

Ya got me bud

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Dean Greenhoe

When are they going to learn. Put the 15M in a contract as a bonus based on performance. If they do all that is expected, they get it, else it is fortified.

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Roger Melly

I think you mean forfeited mate :)

Loyheta
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Loyheta

uhm… just a little note for this article. This guy is replacing the guy that replaced him. He was the CFO of ActiBlizz from 2012 to 2017.

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Utakata

NM about the hypocrisy of it all…

…where do my Goblins sign up for this position? o.O

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Bruno Brito

Can’t explode anything, but as any goblin worth it’s salt, they would already have invented this position.

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NeoWolf

The company which wants cost cuts everywhere and has layoffs and can yet somehow russle up 15 mil as a signing bonus for a suit… yeah thats not an obscene misuse of funds at all.. nice to know the money is going where it is most needed and deserved.. NOT.

PurpleCopper
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PurpleCopper

It seems like the majority of that signing bonus is in equity, which is a GOOD thing. Executives with skin in the game are more motivated than just pure cash.